Mr. Pablo Zalba, Vice-President of the Economic and Monetary Affairs Committee, states that this research shows that the model used by most of the Spanish banking sector has been an exercise in transparency that no other banking sector of the European Union has carried out.
A group of banking research experts at the Economics Faculty of the University of Navarra, the University of Alicante and the International Monetary Fund (IMF) have presented pioneering research in the European Parliament which analyses the recapitalisation of banks with public money in the period between January 2004 and December 2012 in 24 countries.
One of the conclusions of the report, coordinated by Ms. Reyes Calderón, Dean of the Economics Faculty at the University of Navarra, is that better managed banks “means less recapitalisation costs for taxpayers”, explained Mr. Germán López Espinosa, co-author of the research.
Commissioner Barnier, recalling that, between 2004 and 2012, member states of the European Union more than 550,000 million euros of public money to help the private bank sector, defended that what was needed was to agree a solution at a European scale which would be valid for most international banking groups.
The public recapitalisation of private banks has been that, between 2008 and 2012 “a cost to the public purse without precedent in Europe and the USA”, underlined university teacher Antonio Moreno. For example, and to cite some of the cases most prejudicial for the taxpayer, the Royal Bank of Scotland needed approximately 76,300 million dollars; Citigroup and the Bank of America required 45,000 million each; Bankia, 28,900 million; and Commerzbank, 24,200 million.
To date, banks in the USA have paid back 97% of the amount lent by their Government, but “in Europe we have been much slower and used very heterogeneous instruments”, explained Mr. Moreno. For example, in Spain, the big recapitalisation was in 2012 and the amount given back has been “very small”. In the USA it was in 2008.
University teacher Antonio Rubia has pointed out that international diversification “has had a net positive effect on the banking sector, reducing both the probability of recurring to recapitalisation and the volume of capital necessary to rescue a bank, and thus the anticipated costs of public intervention”.
This fact supports the strategy followed, for example, by the large Spanish Banks which, under the aegis of tax incentives, at the time made large-scale investments in international expansion, mainly in South America. This strategy provided them with “a robust source of income during the period of crisis and reduced their exposure to the domestic mortgage market”, explained this lecturer. Together with other factors, this aspect was key to understanding why the Banks have demonstrated greater financial strength tan the Spanish cajas de ahorros (savings banks).
Banking Unity in Europe
In order to prevent future public bank rescues, to make our banking sector less vulnerable and less costly for the taxpayer in the future, we need more Europe”, highlighted Mr. Moreno. “More Europe in the form of banking unity, with a single body which oversees solvency, liquidity, management and sources of financing of the banks, in an effective way and common to all countries in the Union; more Europe in the form of a monetary policy which takes into consideration the overall situation of the countries of the Union, and not just the biggest; and more Europe to boost measures of good governance at a European scale which avoids crises that are transmitted throughout the European Union”.
Mr. Pablo Zalba, Vice-President of the Economic and Monetary Affairs Committee, states that this research shows that the model used by most of the Spanish banking sector has been an exercise in transparency that no other banking sector of the European Union has carried out. The research also shows the utmost need in the European Union to implement banking unity in the European Union. "I have no doubt that the day that these three pillars are implemented, the European banking sector will be reinforced in the face of future crises, and so I would encourage Commissioner Barnier to continue working to boost banking unity and funding", pointed out the European parliamentarian for Navarre.
Finally, lecturer Mr. López Espinosa concluded that a bank “has to be required to be efficient, this being the best measure to evaluate the quality of the management team. If it has an accentuated social dimension, in the end this means greater costs to the taxpayer”. Moreover, he believes that “an excessive level of competition” would imply very narrow margins and significant exposure of the banks to cyclical changes. The research presented at the European Parliament is unique for the length of the period under study and for the data bases generated, as it includes information from countries such as the USA, the UK, Ireland, Spain, France, Germany, Australia, Canada, Japan and Belgium, amongst others, including detailed data on 84 financial institutions from 24 countries.
http://www.basqueresearch.com/berria_irakurri.asp?Berri_Kod=4647&hizk=I#.UecAoGt5mSM
A group of banking research experts at the Economics Faculty of the University of Navarra, the University of Alicante and the International Monetary Fund (IMF) have presented pioneering research in the European Parliament which analyses the recapitalisation of banks with public money in the period between January 2004 and December 2012 in 24 countries.
One of the conclusions of the report, coordinated by Ms. Reyes Calderón, Dean of the Economics Faculty at the University of Navarra, is that better managed banks “means less recapitalisation costs for taxpayers”, explained Mr. Germán López Espinosa, co-author of the research.
Commissioner Barnier, recalling that, between 2004 and 2012, member states of the European Union more than 550,000 million euros of public money to help the private bank sector, defended that what was needed was to agree a solution at a European scale which would be valid for most international banking groups.
The public recapitalisation of private banks has been that, between 2008 and 2012 “a cost to the public purse without precedent in Europe and the USA”, underlined university teacher Antonio Moreno. For example, and to cite some of the cases most prejudicial for the taxpayer, the Royal Bank of Scotland needed approximately 76,300 million dollars; Citigroup and the Bank of America required 45,000 million each; Bankia, 28,900 million; and Commerzbank, 24,200 million.
To date, banks in the USA have paid back 97% of the amount lent by their Government, but “in Europe we have been much slower and used very heterogeneous instruments”, explained Mr. Moreno. For example, in Spain, the big recapitalisation was in 2012 and the amount given back has been “very small”. In the USA it was in 2008.
University teacher Antonio Rubia has pointed out that international diversification “has had a net positive effect on the banking sector, reducing both the probability of recurring to recapitalisation and the volume of capital necessary to rescue a bank, and thus the anticipated costs of public intervention”.
This fact supports the strategy followed, for example, by the large Spanish Banks which, under the aegis of tax incentives, at the time made large-scale investments in international expansion, mainly in South America. This strategy provided them with “a robust source of income during the period of crisis and reduced their exposure to the domestic mortgage market”, explained this lecturer. Together with other factors, this aspect was key to understanding why the Banks have demonstrated greater financial strength tan the Spanish cajas de ahorros (savings banks).
Banking Unity in Europe
In order to prevent future public bank rescues, to make our banking sector less vulnerable and less costly for the taxpayer in the future, we need more Europe”, highlighted Mr. Moreno. “More Europe in the form of banking unity, with a single body which oversees solvency, liquidity, management and sources of financing of the banks, in an effective way and common to all countries in the Union; more Europe in the form of a monetary policy which takes into consideration the overall situation of the countries of the Union, and not just the biggest; and more Europe to boost measures of good governance at a European scale which avoids crises that are transmitted throughout the European Union”.
Mr. Pablo Zalba, Vice-President of the Economic and Monetary Affairs Committee, states that this research shows that the model used by most of the Spanish banking sector has been an exercise in transparency that no other banking sector of the European Union has carried out. The research also shows the utmost need in the European Union to implement banking unity in the European Union. "I have no doubt that the day that these three pillars are implemented, the European banking sector will be reinforced in the face of future crises, and so I would encourage Commissioner Barnier to continue working to boost banking unity and funding", pointed out the European parliamentarian for Navarre.
Finally, lecturer Mr. López Espinosa concluded that a bank “has to be required to be efficient, this being the best measure to evaluate the quality of the management team. If it has an accentuated social dimension, in the end this means greater costs to the taxpayer”. Moreover, he believes that “an excessive level of competition” would imply very narrow margins and significant exposure of the banks to cyclical changes. The research presented at the European Parliament is unique for the length of the period under study and for the data bases generated, as it includes information from countries such as the USA, the UK, Ireland, Spain, France, Germany, Australia, Canada, Japan and Belgium, amongst others, including detailed data on 84 financial institutions from 24 countries.
http://www.basqueresearch.com/berria_irakurri.asp?Berri_Kod=4647&hizk=I#.UecAoGt5mSM
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